What is a Trust in Law?

What is a Trust?

• A trust is a relationship in law where the holder or owner of property transfers the legal title to another individual, not as a gift, but to hold said property for the benefit of a third party.
• The property in question can be land, private property, money, or a fund, and it is held by a trustee for the benefit of a beneficiary.

Parties Involved in a Trust

• Settlor/Testator: The original owner of the legal title who transfers it to a trustee, creating a trust.
• Trustee: The individual who holds the legal title of the property and is responsible for managing it for the benefit of the beneficiary.
• Beneficiary: The person who benefits from the trust, having Equitable rights to the property.

Legal and Equitable Ownership

• The settlor/testator has the original legal title, which is transferred to the trustee.
• The trustee holds the legal title, but the beneficiary has Equitable rights to the property.
• This divides the legal and Equitable interests in the same property between the trustee and beneficiary.

Purpose of a Trust

• To provide protection and benefit for a third party, often family members, as seen in the historical context of landowners creating trusts for their future families.

Overview of Trusts

• Trusts can be private Express trusts, implied trusts, resulting trusts, constructive trusts, and discretionary trusts, among others.
• Each type of trust has its own characteristics, formalities, and requirements for establishment.

What is a Trust?

• A trust is a legal relationship where the owner of property transfers the legal title to another individual, not as a gift, but to hold the property for the benefit of a third party.
• The property can be land, private property, money, or a fund, and is held by a trustee for the benefit of a beneficiary.

Parties Involved in a Trust

• Settlor/Testator: The original owner of the legal title who transfers it to a trustee, creating a trust.
• Trustee: The individual who holds the legal title of the property and is responsible for managing it for the benefit of the beneficiary.
• Beneficiary: The person who benefits from the trust, having Equitable rights to the property.

Legal and Equitable Ownership

• The settlor/testator has the original legal title, which is transferred to the trustee.
• The trustee holds the legal title, but the beneficiary has Equitable rights to the property.
• This divides the legal and Equitable interests in the same property between the trustee and beneficiary.

Purpose of a Trust

• To provide protection and benefit for a third party, often family members, as seen in the historical context of landowners creating trusts for their future families.

Types of Trusts

• Trusts can be private Express trusts, implied trusts, resulting trusts, constructive trusts, and discretionary trusts, among others.
• Each type of trust has its own characteristics, formalities, and requirements for establishment.